EFFECTS OF UNEMPLOYMENT AND INFLATION ON ECONOMIC GROWTH IN NIGERIA, 1986-2012.
EFFECTS OF UNEMPLOYMENT AND INFLATION ON ECONOMIC GROWTH IN NIGERIA, 1986-2012.
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Date
2014-10
Authors
AMINU, UMARU
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Abstract
This thesis investigates the effects of unemployment and inflation on economic growth in
Nigeria between 1986-2012 through the application of Ordinary Least Square (OLS)
technique in estimating the effects of unemployment and inflation on growth, Augmented
Dickey-Fuller test and Phillip‟s-Perron test statistics were employed to test the presence of
unit root in the series, after which Johansen cointegration test was employed to test the
existence of long-run relationship between economic growth and the independent variables.
The results of unit root suggest that all the variables in the model were stationary. The
Johansen cointegration result shows that there exist 2 cointegrating equations, implying the
existence of long run relationship between economic growth, unemployment and inflation.
The results also reveal that unemployment impacts negatively on economic growth while
inflation rate impacts positively on economic growth. However,, only the coefficient of
unemployment was found to be significant. The hypothesis test result using f-statistics
reveals that unemployment and inflation jointly affect economic growth at 1 percent and 5
percent respectively, with values of 5.8900 in model II and 4.0637 in model III. This
therefore, implies that a good performance of the Nigerian economy in terms of growth may
be achieved with lows rate of unemployment and inflation in the country. Based on the
coefficients of unemployment -4.6727 and inflation 0.0246 in model III, it follows that 1
percent reduction in unemployment would increase economic growth by 4.6727 percent,
while 1 percent increase in inflation would increase economic growth by 0.0246 percent;
hence a major policy implication is that concerted effort should be made to reduce
unemployment and stabilize the prices of goods and services (inflation) so as to achieve high,
rapid and sustained economic growth rate in Nigeria.
Description
THESIS SUBMITTED TO THE SCHOOL OF POSTGRADUATE STUDIES,
AHMADU BELLO UNIVERSITY, ZARIA
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD
OF MASTERS DEGREE IN ECONOMICS.
Keywords
EFFECTS OF UNEMPLOYMENT,, INFLATION,, ECONOMIC GROWTH,, IN NIGERIA, 1986-2012.